"In late 2020 and early 2021, the U.S. was being pummeled by Covid-19, by its scattershot response to the pandemic and by toxic politics.
Many observers concluded the nation had entered terminal economic and political decline. But a year later, having suffered through Covid-19 and the associated political shocks, it was growing strongly again and had reasserted itself on the world stage.
Something similar is happening in China now.
China's 4.5% first-quarter growth figure surprised many economists, who expected somewhere in the neighborhood of 4%, particularly given continuing drags from China's housing-market crash and a conservative monetary stance. To be sure, there are important differences: Chinese households never received big government checks and so, while the consumption rebound is impressive, it likely won't have quite the staying power that the U.S.'s did. Significant structural damage to the nation's housing market and to its high-tech sector from the policy missteps of the past two years will persist, and demographics are a drag.
But none of that means China can't experience a period of above-trend rebound growth now that it passed through the wringer. Given the strong momentum the economy has now and given the low-base effect next quarter from last year's Shanghai lockdown, China's second-quarter growth will likely be significantly stronger.
The consumption figures were the most impressive, as expected: Retail sales rose 10.6% year over year, up from 3.5% in January and February.
But the Chinese housing market is in better shape than it appears. Although investment weakened again marginally in March, which may partly explain why coal and steel prices have lagged of late, residential floor space sold rose year over year for the first time since June 2021. And housing floor space completed rose 35%, up from a 10% gain in January and February and double-digit declines as recently as November. Housing starts and investment are lagging but the backlog of uncompleted, presold apartments -- the key factor weighing on the market -- appears to have been whittled down.
Given that fact, and the strong rebound in domestic consumption and travel, it is no surprise to see oil demand jumping back as well. China's apparent petroleum demand -- refinery runs plus net oil product imports -- rose nearly 10% year over year in March according to figures from data provider CEIC. That was up from a 3.9% fall in December 2022, confirming other hints earlier this year that oil demand was rebounding quicker than expected. By the second half of the year, China's property rebound and oil demand are likely to start having a much more noticeable impact on global commodity prices -- although a construction frenzy on the scale of previous stimulus episodes remains unlikely.
One area where optimism may be slightly misplaced is trade. China's March exports surprised strongly on the upside, partly on the strength of burgeoning trade with Russia, but the official manufacturing purchasing-managers index showed growth in new export orders slowing slightly. Output of key export-related manufactured goods like smartphones and computers also remained weak in March: Production fell 6.7% and 21.6%, respectively, year over year.
China still has a significant economic hole to climb out of, but these latest figures show it is back in business. The policy mistakes of the Covid-19 era have done some long-term damage to China's prospects. But they won't be enough to remove the country as a formidable global economic force -- even though many in Washington might wish that to be the case." [1]
Chances for the EU to scoop up energy cheaply this year's winter? Zero chance, because China will need the energy. How interesting...
1. Chinese Economy Defies Naysayers --- The country's first-quarter growth shows it is far from a spent economic force
Taplin, Nathaniel. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 19 Apr 2023: B.14.
Komentarų nėra:
Rašyti komentarą